) reported third-quarter 2013 adjusted earnings from continuing
operations of $1.54 per share, beating the Zacks Consensus
Estimate of $1.50 and up 23% from the prior-year quarter's
earnings of $1.25 per share. Organic growth across all segments,
strength in drilling and downstream markets within Energy,
refrigeration & food equipment markets, and Printing &
Identification, and cost reduction activities helped the
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On a reported basis, earnings from continuing operations were
$1.53 per share, up 20% from $1.27 per share earned in the
prior-year quarter. Earnings in the reported quarter included tax
benefit of 3 cents per share, one-time gains of 2 cents and a
charge of 6 cents per share related to the Knowles spin off. The
year-ago quarter included gains from discrete
and other tax items of 2 cents per share.
Revenues and Margins
Total revenue rose 7% year on year to $2.25 billion in the
quarter, but fell short of the Zacks Consensus Estimate of $2.3
billion. The year-over-year rise includes an organic growth of 3%
and a 4% contribution from acquisitions.
Cost of sales increased 7% to $1.37 billion in the quarter from
$1.29 billion in the year-ago quarter. Gross profit went up 8%
year over year to $877 million. Consequently, gross margin
expanded 30 basis points (bps) to 38.9% in the quarter.
Selling, general and administrative expenses increased 7% year
over year to $482 million. Operating profit in the reported
quarter increased 10% to $394 million. Operating margin also
expanded 40 bps to 17.5% in the quarter.
Revenues in the Communication Technologies segment rose 4% year
over year to $413.6 million in the reported quarter. The
segment's income increased 19% year over year to $76 million.
Energy revenues went up 3% to $577 million in the quarter. The
segment's operating income went up 5% to $145.5 million from $139
million in the prior-year quarter.
Revenues in the Engineered Systems segment increased 13% to
$1,005 million in the quarter. The segment's income also improved
19% to $172 million.
Printing & Identification segment revenues were $256 million
in the quarter compared with $247 million in the prior-year
quarter. The segment reported an operating income of $42.9
million, increasing 9% from $39.5 million a year ago.
Bookings and Backlog
The company ended the third quarter of 2013 with bookings worth
$2.16 billion versus $1.98 billion at the end of the third
quarter of 2012. Backlog increased year over year to $1.54
billion at the end of the reported quarter compared with $1.51
million in the year-ago quarter.
The company generated cash flow from operating activities of $340
million in the reported quarter, up from $286 million in the
prior-year quarter. Free cash flow was $283 million compared with
$218 million in the prior-year quarter.
Outlook for 2013
Due to weaker-than-expected market conditions, Dover tweaked its
earnings guidance to a range of $5.57-$5.64 per share from the
prior earnings expectation of $5.56-$5.71 per share. Dover now
expects revenue growth of 7% compared with its previous
projection of 7%-9% growth. The new guidance assumes an
organic revenue improvement of 3% and a 4% contribution from
Dover will continue to benefit from its acquisitions, growth in
bookings and orders, and a positive outlook for the semiconductor
market. However, volatile raw material costs will put margins
under pressure and the printing & identification segment
results are likely to be affected given its above-average
exposure to Europe.
Dover currently retains a short-term Zacks Rank #2 (Buy). Along
Manitex International, Inc.
) also belong to the diversified machinery industry. While
Manitex carries a Zacks Rank #1 (Strong Buy), Colfax and
Ingersoll retain a Zacks Rank # 2 (Buy).